Friday, November 19, 2021

Sen. Warren Calls On SEC To Investigate Trump SPAC Deal


Sen. Elizabeth Warren (D-MA) asked the Securities and Exchange Commission (SEC) to iIvestigate a Planned SPAC Deal involving Trump. Warren noted recent News Reports, that Digital World Acquisition Corp. (DWAC), which Plans to merge with Trump's New Social Media Company, "may have committed securities violations by holding private and undisclosed discussions about the merger as early as May 2021."

Warren said she is concerned "about the misaligned incentives underlying SPAC Deals, which are often Structured to Exploit Retail Investors to the Benefit of Large Institutional Investors such as Hedge Funds, Venture Capital Insiders, and investment banks.

Warren wrote, "The reports about DWAC and Trump Media and Technology Group appear to be a textbook example of a SPAC misleading shareholders and the public about materially important information."

So-called Special Purpose Acquisition Companies, such as DWAC, are created to Raise Capital in Public Equity Markets, with the Goal of Purchasing or Merging with Private Firms.

Trump Media & Technology Group, last month, said it had entered into a Merger Agreement with DWAC that would End, with Trump's Company becoming a Publicly Listed Company, subject to Regulatory and Stockholder Approval.

Warren's Letter to the SEC cited an Oct. 29th Article in The New York Times, which carried the Headline, "Trump’s $300 Million SPAC Deal May Have Skirted Securities Laws." After that Article, some Investors in DWAC sold their Investments.

That Article, citing Sources, Reported that DWAC's Chief, Patrick Orlando "had been discussing a deal with Mr. Trump since at least March," Months before Shares in that began Trading on the Nasdaq in September. The Times noted that SPACs are Not supposed to have Mergers Planned, at the time of their Initial Public Offerings.

Warren's Letter cited the Securities Act of 1933, Bars False Statements or Failing to State a Material Facts, in the Sale of a Security.

Warren said that under that Law: "SPACs are required to disclose any direct or indirect conversations with potential target companies, protecting both the early investors and retail investors joining at the initial public offering. But DWAC and Trump Media and Technology Group appear to have brazenly flouted these rules. DWAC indicated in numerous SEC filings between May 25, 2021 and September 8, 2021 that the organization stated, '[w]e have not selected any specific business combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any business combination target.'".

Trump at the same time that theMmerger was Announced said that would Roll-Out a Platform called "TRUTH Social," which he claimed will "stand up to the tyranny of Big Tech."

Trump was Banned by Social Media Giants, Twitter and Facebook, earlier this year, after Accusations he Incited the Jan. 6th Capitol Riot by his Supporters.










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